A Blog by Jonathan Low

 

Dec 2, 2017

How Much Are Those Online Discounts, Really?

They don't seem like much, but appear to be sufficient. JL

Price Economics reports:

Online shoppers secure a discount 38% of the time when using a coupon code and that the average price reduction is 19%, translating to a mean cash savings of $25.
When buying something online, there is usually an intriguing field during the checkout process called "coupon code." Input something like "SEW4HOME" and magically get 10% off your purchase! Some shoppers are making a purchase because they already have the code, while others frantically do a Google search to see if they can find a discount code that works.
But just how significant are the typical discount codes offered by retailers? Moreover, how often are these codes available and do they actually work? And for which popular sites can you typically score a working code?
To answer these questions, we analyzed data from Priceonomics customer CouponFollow, a company that provides a browser extension to automatically check if there is a discount code available while you a buying something online (and apply the code if one is available). The data set spans various retailers, including top destinations like Target, Groupon, Pizza Hut, and Hotels.com, almost every major retailer has instituted or tested some type of couponing strategy.
According to this analysis online shoppers were able to secure a discount 38% of the time using a coupon code.
These coupon codes offer an average price reduction of 19%, which equates to a mean cash savings of $25 and an average cart total of $138 (post-reduction). Some retailers have offer reductions up to 90% of the time, with markdowns ranging in size and significance. For example, the promo codes used at Udemy — an online learning platform — fetch an average savings of 58.2%. Lesser known brands like Musician's Friend — an instrument and music equipment retailer — deliver an average savings of $225 per transaction when a valid coupon is activated.
WHICH SITES DISCOUNT MOST OFTEN?
We delved deep into three months of data to determine which retailers offer the most valuable deals and discounts. Specifically, we focused on large companies that logged more than 200 transactions from users of our browser extension during a three month timespan, who range in age from 18 to over 65 — with the majority falling between the ages of 25 and 34 — and identify as both male and female (53% and 47%, respectively).
First, we looked at individual retailers to see which ones had valid discount codes for the highest percentage of purchases. Below is the list of sites where you have the highest chance of getting a working discount code on your purchase:

Data source: CouponFollow
If you shop at any of these sites, you should pretty much always check if a code is available. We found that shoppers receive a price reduction more than 90% of the time at the following stores: Blair, Woman Within, Puritan's Pride, and AutoZone. As a category, clothing retailers are most likely to offer savings. However, brands like Bath & Body Works, Vistaprint, and World Market — all of which honor coupon codes more than 78% of the time — prove that a progressive discount policy is not category specific.
DISCOUNT RANKING BY DOLLAR AMOUNT
The everyday consumer is likely more influenced by dollars than ratios and percentages, so we investigated which retailers offer discounts that provide the largest cash savings.

Data source: CouponFollow
Musician's Friend leads the pack with an average discount of $225, far ahead of Pottery Barn Kids at the number two spot. West Elm, Neiman Marcus, and Bloomingdale's round out the top five, each doling out reductions of over $100 on average when a valid coupon is used. Keep in mind that brands often experiment with pricing strategies, so frequency of coupon success can fluctuate. Also, shoppers may encounter exclusions or exceptions — even when a code appears to be valid sitewide.
DISCOUNT RANKING BY PERCENTAGE
While an average discount of $50 may seem significant, one must compare the reduction value to the purchase price in order to calculate the true savings total. To identify which brands offer the deepest markdowns, we evaluated the data and rated the largest discount by percentage.

Data source: CouponFollow
The online learning platform Udemy tops the chart once again with a hefty average discount of 58.2%. This makes sense considering the relatively low cost of scaling a digital information product. Clothing retailers such as LOFT and Lulus also offer large discounts (41.1% and 37.9%, respectively) that are far beyond the overall average discount of 19%.
AVERAGE DISCOUNT BY CATEGORY
Many factors play a role in a retailer's ability to offer discounts, including profit margins and business models. We analyzed savings by category to uncover which offer the largest and smallest reductions.
Retailers that sell products related to food, gifts, and home goods provide the most significant savings, with an average discount of more than 20%. Clothing and apparel retailers also offer large reductions, especially towards the end of a season to make room for new inventory.
SAVINGS BY CATEGORY: CLOTHING AND APPAREL
Since some industries offer more lucrative deals than others, we parsed through our data to compare discounts by category, starting with the one that delivers the most savings: clothing and apparel.
In this category, LOFT tops the list with an average discount of 41.1%, followed closely by Lulus, at 37.9%. One retailer that many shoppers may be surprised to see in the top ten is J.Crew — a brand that's historically been averse to coupons. With declining sales and a recent management overhaul, it appears the company has changed their tune and is now offering generous savings.
SAVINGS BY CATEGORY: DEPARTMENT STORES
When we cast our net wider to include department stores, Kohl's leads the pack with an average discount of 36.1%. The nearly century-old retailer has a reputation for heavy reductions and, in many cases, even allows for coupon stacking — the combining of multiple retailer and manufacturer promotions. Conversely, Kmart is more conservative with coupons, falling just below Target at a surprisingly low average discount of just 11.9%.
SAVINGS BY CATEGORY: SHOES AND SNEAKERS
When analyzing shoe retailers for savings, Adidas comes in first, with an average discount of 23% — a full nine percentage points higher than their competitor New Balance. It's worth noting that many companies on the list, including Adidas and New Balance, operate full-service stores that sell more than just shoes.
SAVINGS BY CATEGORY: CUSTOM PRINTING
Another category that offers substantial savings is custom printing. Both Shutterfly and Vistaprint boast an average discount of 26% — eleven percentage points higher than the overall retail average of 19%. Zazzle — a platform for creating and printing customized products —comes in with a mean savings of 14%.
SAVINGS BY CATEGORY: AUTOMOTIVE
In the automotive category we found that Advance Auto Parts is the industry leader, with an average discount of 17.8%. This, however, is only a few percentage points higher than AutoAnything and AutoZone — both worthy runner ups. While none of the retailers in this category offer especially deep reductions, cost-conscious shoppers can expect to receive significant savings when using coupons at automotive websites, as these are often large ticket purchases.

SAVINGS BY CATEGORY: PIZZA DELIVERY
Pizza has become a cultural phenomenon in United States, with the average American spending more than $37 billion a year on the cuisine. Not surprisingly, such high demand has created a slew of opportunities to save.
Our data shows that the average discount for both Papa John's and Domino's Pizza exceeds 25%, which is noteworthy when compared to other categories. Pizza Hut, on the other hand, trails behind by over ten percentage points. Unlike other industries, pizza chains often leverage regional events for special, time-sensitive deals. Papa John's, for example, shows their support for local sports teams through the provision of steep, citywide reductions.
SAVINGS BY CATEGORY: TRAVEL AGGREGATORS
The final category we explored was travel aggregation, where Travelocity takes the definitive lead. While Expedia and Hotwire appear to shy away from discounting, Travelocity offers coupons that can save consumers an average of 17.7%. This is particularly valuable, considering the category's high average checkout size. Although all three brands are owned by parent company Expedia Inc., Travelocity is the clear winner for budget-conscious shoppers, with coupon codes being applied during 49% of all transactions made on their platform during this period.
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For those who are willing to find coupon codes, there are plenty of discounts to be had. This is evidenced in our findings, which show online shoppers secure a discount 38% of the time when using a coupon code and that the average price reduction is 19%, translating to a mean cash savings of $25.

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